Commentary on Economics, Information and Human Action

“The U.S. Current Natural Gas Situation”

What do changes in the domestic U.S. natural gas market have to tell us about the world oil market? Hirsch, Bezdek, and Wendling wrote, “The North American natural gas situation provides some useful lessons relevant to the peaking of conventional world oil production.”

Here is their assessment of the North American natural gas situation:

U.S. natural gas demand is increasing; North American natural gas production is declining or poised for decline as indicated in references 53, 54, and 55. The planned U.S. expansion of LNG imports is experiencing delays. U.S. natural gas supply shows every sign of deteriorating significantly before mitigation provides an adequate supply of low cost natural gas. Because of the time required to make major changes in the U.S. natural gas infrastructure and marketplace, forecasts of a decade of high prices and shortages are credible.

Makes me wonder what Hirsch, Bezdek, and Wendling think about the peaking of world oil production now. One clue, from 2010, suggests they no longer draw analogies from the North American gas market when discussion world oil production.